Intercontinental Hotel Group and Its Industry Analysis

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The hospitality business is a complex and multi-component economic environment. For the effective functioning of such an enterprise, it is necessary to consider many factors. To better understand how such a business can function, it is essential to review this area using a specific example. This paper aims to examine the hospitality industry using the Intercontinental Hotel Group pattern and examine Porters five forces with this company.

The lodging industry is a service centered around the provision of accommodation and temporary housing services. All other services are growing around this concept, and depending on their range, the hotel business can be divided into several categories. In general, hotel services are divided into limited, mid-range and full-service (Lock, 2020). For customers, the most familiar is the five-star rating system, which is an ascending scale. While five-star hotels are considered the highest class, places with only one star in the rating provide the most limited services in terms of quantity and quality.

Several critical indicators can be used to analyze the industry. Since the basis and the principal value for this business is precisely the provision of rooms, these indicators represent revenue per available room (RevPAR), occupancy, and average daily rate (ADR) (Lock, 2020). Given that travelers flow has increased lately as more people begin to consider travel as part of their everyday life, the hotel business thrives on this driver of change (Lock, 2020). Another additional trend is providing additional services that allow hotels to receive extra income by offering customers various optional means of comfort.

The British company Intercontinental Hotels Group (IHG) is one of the largest in the market, with many divisions and branches worldwide. At the moment, the corporation ranks fourth in terms of market capitalization (Lodging screener, 2020). Thus, IHG has a strong market position that allows the company to resist intense competition, which is the first of the Porter model forces (Scott, 2020). Although the number of hotels is growing steadily every year due to the increasing flow of customers, IHG manages to maintain its influence through a vast network of branches and equal impact at various business levels. The companys hotels provide services of all levels, from the most economical to the luxury, while focusing more on the mid-high price segment, unattainable for many start-up companies (Industry overview, no date). Therefore, even though the potential for the arrival of new companies, Porters second strength, is relatively high, they do not substantially impact IHG due to this corporations massiveness and stability.

The next factor in this model is suppliers power and influence, and IHG depends on them very little. First, since the companys hotels are distributed worldwide, they do not rely on any particular supplier. Secondly, the services required by hotels are always relevant in the market, and there is no exact and rigid dependence on a specific company. Therefore, in this context, IHG can also be considered sustainable. The fourth factor in Porters model is the number of customers, and while the hotel business is thriving, there are several problems. For example, the spread of COVID-19 makes travel problematic, thereby reducing the flow of shoppers. Hence, IHG will have to take countermeasures to combat external factors influence in the near future. This is especially true in light of the emerging alternatives on the market, which is Porters fifth strength (Scott, 2020). Recently, online rental services such as Airbnb have become increasingly popular, providing customers with the comfort and coziness of home at relatively low prices. The corporation may need to modernize its policies to meet changing market needs.

Thus, the hospitality industry is a complex and multifunctional sphere of service provision, for which it is necessary to take into account many factors to work effectively. Based on Porters models analysis, it can be concluded that Intercontinental Hotel Group is a stable company with a strong position in the market. However, due to changes in the world and new trends, even such a large corporation may soon need a strategy change.